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Ethics and integrity

As a company that operates across cultures, traditions and legal jurisdictions, we are committed to be an ethical, value-based corporate citizen operating in a fair and legal way in every market. Respect for human rights is embodied in our values and leads our business. Honesty and integrity are our foundation; simply, this is how we want to do business. Above all, to us, acting ethically and responsibly is the right thing to do.

Below are the highlights of our approach and performance in 2017. Please go to the Sustainability Report 2017 for the comprehensive version.

Legal compliance

Anti-corruption

Our Code of Conduct and Grundfos Anti-bribery Compliance Programme are the foundations for managing compliance in all markets.

Internal controls and audits: Our Corporate Internal Control (CIC) has issued an audit instruction that lays down guidelines for control visits to local companies, with a focus on companies in high-risk countries.

Compliance screening: We throughly screen both customers and suppliers against sanctioned party lists.

Public policy: Grundfos is independent of party politics but supports and encourages public officials to develop sound policies by offering well-reasoned inputs.

Competition law

In every market that we do business, it is essential that we comply with applicable competition legislation. This affects all aspects of our dealings and our relationships with competitors and customers.

Our results

Whistleblower system

A new Whistleblower System was introduced by the Ethics Committee in March 2017 and is available in all countries we operate in, managed by a third party.

We expect an increasing number of reports through the system as we work to raise awareness of it and there has been an increase in reports of irregularities since the launch.

Annual financial statements

Our annual financial statements comply with the Danish Financial Statements Act (Årsregnskabsloven) and are audited by an independent auditor.

Grundfos Group Reporting, also known as the Monthly Performance Report, provides detailed information about the performance of different units within the group for management.

Risk assessment

Global Anti-corruption Risk Assessment covered all Group sales and operation entities and markets.

The assessment identified no incidents relating to corruption, but we flagged potential risks that we are exposed to. We plan to base our mitigation initiatives on this risk assessment.

In 2017, we received 52 complaints through the whistleblower system. Of these, three were considered breaches of the Code of Conduct in the areas of conflict of interest, bookkeeping and accounts, and compliance with laws and regulations.

Human rights and forced labour

Human rights

Respect of human rights is embeddded in our Code of Conduct and is integral to our values. We endorse and use the United Nations Guiding Principles for Business and Human Rights (UNGP) as a frame of reference.

Our results

To assess our human rights impact in different areas of business, we drafted the Grundfos Human Rights Policy in 2014. We also want to identify opportunities to advance human rights, which is detailed in our Prevention of Modern Slavery Progress Report 2016.

With the support of Business for Social Responsibility (BSR), we assessed potential impacts globally in 2015 and assessed gaps in five selected countries in 2016. Our upcoming initiatives will focus on closing these gaps.

In 2016, the HR representatives of China, Denmark, India, Russia and Mexico received 1.5 hours of training regarding the UN Guiding Principles, to prepare for an upcoming human rights assessment. In 2017, we conducted a pilot Human Rights Impact Assessment in China, with BSR. It identified opportunities to collaborate with business partners and needs to enhance the management of some issues.

In regards to forced labour, we identified the need to include monitoring deeper down the supply chain, and to look closely at some service providers in high-risk countries.

In practice: Code of Conduct Training for all employees

Employees at all levels must know the guidelines of our Code of Conduct and how to live by them.Therefore, training was rolled out across the entire organisation as well as across functions and departments. With a training rate of more than 85%, our 2017 global Code of Conduct training highlighted issues such as preventing corruption, including bribery and facilitation payment, conflict of interest, observing human rights and avoiding discrimination.

The training emphasises our ethical guidelines, dealing with dilemmas that we might meet in our daily life as a part of a global company.

“In the same way as our strategy and values set the direction of the company, our Code of Conduct sets the direction as to how we must act in a value-based organisation like Grundfos. It is crucial that all employees in all functions and at all levels are familiar with the principles and know how to respond to dilemmas. To make sure that our employees know how to act in a way that is ethically correct, we have involved all of them in discussions and workshops concerning our Code of Conduct, which is quite unique,” says Kim Nøhr Skibsted, Group Vice President, Communications, Public Affairs & Engagement.

Sustainable supply chain

Our approach

Our Grundfos Suppliers Code of Conduct communicates to our suppliers that we expect them to operate in accordance with local and international standards with regard to human rights, labour rights, the environment and business integrity, among other issues. The audits measure a supplier's level of compliance with the Grundfos Suppliers Code of Conduct.

The audit occurs in two ways:

By Grundfos internal employees, when a company is being evaluated as a potential supplier and when there is any change in the supply situation. We assess a selection of tier 1 and global direct material suppliers on their environmental and social impacts.

By an external agency, when a supplier appears on the annual social-risk radar.

Our results

In our supply chain, we have dramatically increased the number of sustainability audits, going from 15 in 2016 to 97 in 2017. Our main goal today is to close the gaps identified as well as to conduct additional audits.

Environmental impact

1 existing supplier was found of having a minor negative potential issue

0 new suppliers were found oto have a potential issue

100% new suppliers were screened using an environmental and social criteria